Clients Facing Dementia Risk Prefer CDs

A study conducted by three specialists for the National Bureau of Economic Research turned up a vital, if unsurprising piece of information: seniors who are concerned about the ravages of dementia – in particular, those who have experienced some memory loss or are aware of genetic predisposition to the disease – prefer to put their money in simplified investments that require little or no oversight.

The research was based on data collected by the Health and Retirement Study program, which operated from 1992 to 2014. Americans age 50 and above were regularly surveyed by the HRS and genetic testing was conducted to determine the risk of developing dementia among respondents.

The current study found that people in the highest risk group were around 9% more likely to place retirement funds into so-called “hands-off” investments like CDs. High-risk respondents hold notably fewer stocks, fewer assets in individual retirement accounts and are more likely to eschew other types of investment that required ‘hands-on’ participation from the clients.

Three hypotheses were considered to explain this preference for hands-off investments. These include knowledge of a family history of dementia and the consequences; the appearance of symptoms like confusion and forgetfulness, which drive a tendency towards simple investments; and awareness among high-risk groups of the dangers involved as dementia develops.

The final conclusion was that awareness and understanding of the symptoms and progress of the disease, and the risks that attend it, lead people to simplify their investments as they grow older. In many cases, their children are the driving force or facilitators in making the necessary changes to their aging parents’ retirement portfolios.